Crackdown On Store Card Overcharging

Consumers are still unaware of the high interest rates charged by companies who provide store cards despite changes requested by the Competition Commission (CC), warns an independent financial adviser.

Store card interest rates remain as high as 30 per cent compared to credit card rates of approximately 15 per cent.

Cards that carry interest rates over 25 per cent now have to include a warning on monthly statements stating that cheaper credit is available elsewhere, following findings by the CC.

The Commission, which conducts inquiries into consumer markets, found in March that there was a lack of competition in the store card market and proposed several changes to be implemented over the following 12 months.

But financial adviser Moneyextra believes that the warning on statements will not make much difference because it fails to tackle the actual problem of high interest rates.

"It doesn't do enough to make consumers aware of the costs. It is often pushed by people who don't understand the product either," said Robin Amlot, senior editor of AWD Moneyextra.

"There is a job of customer education to be done."

Other recommendations from the CC include having the APR prominently displayed on statements, offering an estimate of interest payable with minimum, option of paying by direct debit and PPI (payment protection insurance) should be offered separately.